In 1994, the then government of Benazir Bhutto
invited much criticism over its power policy, which liberally allowed
private investors, mostly from abroad. The exorbitant power tariff
offered to the investors with a guaranteed buy-back led to a glut of
project proposals and as much as 34 proposals were splashing on the
official tables offering a cumulative capacity of over 7200 mw as
against the required 3000 mw. It may have been the costliest
investment but at the same time it pushed back the looming shortage of
power in the country. It was a compulsive need to have set up those
plants to cater for the electricity needs of the industry, which
otherwise would face a disaster.

The same scenario is seemingly brewing up again as
the planners instead of capitalizing the available time are still
bickering over the undefined priorities. Sources said that there is a
clear rift between the Ministry of Water and Power and Private Power
Infrastructure Board (PPIB). The ministry is desperate to wooing
foreign investment to meet the power deficit regardless to the already
laid out power policy, which emphases on hydel power projects and
coal-fired power plants follow being the cheapest options. The PPIB, a
one-window facility for investors, is serious to adhere with the
policy, though such kind of projects need longer gestation period. On
the other hand, the ministry is holding road shows in the Middle East
and US to attract any kind of project. The difference of priorities
pose a serious setback to the upcoming power needs, which is feared to
create yet another power saga in the country.

PROJECT OFFERING BEGINS

A plan to install private power projects of around
7,500 MW, with investment of around $8 billion (in the next 8-10 years
has been chalked out by the Private Power and Infrastructure Board (PPIB)
and the Ministry of Water and Power to combat the looming power
shortages in the country. In a summary prepared for the 52nd meeting
of the PPIB it has been pointed out that in the road shows investment
opportunities for hydel, thermal, gas and coal projects for power
generation were highlighted.

PPIB on behalf of the Government of Pakistan, had
arranged two road shows — one in Dubai on February 20-21, and the
other in London on March 2-3 to solicit investment for power
generation projects in Pakistan.

The Brazil Energy, General Electric,
Al-Ghorair
Group, Marubeni and other well-known players showed interest to
participate in the projects. In addition, AES (USA) also showed
interest to develop and implement 1,000 MW project based on Thar coal,
which would bring in an investment of over $1 billion. The President
of Blobeleq (UK) had announced that his company had strong investment
focus on Pakistan and it would invest $1 billion in Pakistan's power
sector.

The summary also referred to the appointment of
advisers for three international competitive bidding (ICB) projects.
Private power and Infrastructure Board intends to carry out ICBs for
three projects i.e. 400-500 MW 'Uch-II' project at Guddu based on BTU
gas from Uch gas field in Balochistan, 450 MW 'dual-fuel' project near
Faisalabad, and a 350 MW 'dual-fuel' project near Lahore.

These projects require investment of around $1.3
billion from the private sector.

Expressions of Interest (EoI) were received from 23
different companies and complete proposals from only six companies.
The last Board meeting had instructed that matter relating to
appointment of advisers and financing costs would be taken up with the
World Bank. The World Bank financing in short-term can be made
available only for hiring individual experts and not for the firms.

PPIB is now inviting bids from the pre-qualified
private firms/consortiums for developing the following three
independent private power projects worth about one billion dollars.

PROJECT AT UCH (UCH-II)

The project will be located near Wapda's existing
power station at Guddu, Sindh. Using low BTU gas from Uch gas field,
available for 25 years, the project will be based on combined cycle
technology. The gas requirement for the project is 160-180 MMCFD and
the cooling water requirement is 270-300 cusecs, which is available.
National transmission and despatch company (NTDC) will be the power
purchaser while oil and gas development company limited (OGDCL) will
supply the gas.

PROJECT AT FAISALABAD

The project will be located very close to the
Wapda's power station at Faisalabad, exactly at the load centre. Its
proposed fuel is dual fuel, i.e. pipeline quality gas and oil. The
project will use combined cycle technology and its gas requirements
will be 90 MMCFD. NTDC and Faisalabad electric supply company (Fesco)
will be power purchasers while Sui northern gas pipeline limited (SNGPL)
will be the gas supplier.

DUAL FUEL PROJECT NEAR LAHORE

The project will be located at Chickoki Malian near
Lahore, and based on combined cycle technology. It will use pipeline
quality gas/oil as fuel. The gas requirements of the project will be
70 MMCFD. NTDC and Lahore electric supply company (Lesco) will be the
power purchasers, while SNGPL will supply gas to the project.

The invitation for proposals has been advertised
through national and international press and the last date for
submission of proposals is June 20, 2005.